How should auction houses handle non payment by the winning bidder?
Back on October 29, I wrote about Kau.com closing at $100,350 at DropCatch. That bidder did not pay, it’s being reauctioned. Is that the right way to handle things?
I have written many times on how DropCatch and NameJet have benefited by GoDaddy failing to secure payment.
Koupons.com closed at $6,100 on 8/17/20 at GoDaddy auctions, they did not collect payment and let the domain name drop. It was caught by DropCatch and went for $13,053.
2XPXP.com closed at GoDaddy for $1,525 back in August and was not paid. DropCatch caught the domain name and it closed at $5,000.
Luceri.com closed at $945 at GoDaddy auctions in August, no pay and DropCatch picked up $551.
Paul Nicks mentioned on Twitter that GoDaddy goes to the next bidder. However on Namepros Joe Styler wrote that it’s not always the case.
I kind of think with reauctioning you are wasting people’s time, it could get reauctioned over and over. A GoDaddy shareholder might not be happy with the GoDaddy method of just letting the domain drop, those are dollars going out the door.
Of course some will say, look GoDaddy is huge those numbers are a rounding error. You should be equipped to have methods in place that allow for next bidder each and every time. Unless no one wanted it.
How would you want to see non paying bidders handled?
I think if the winning bidder defaults, the domain should be awarded to the next highest bidder.
Then you get someone with two accounts bidding it up from $10 to $10,000 super fast, and when the next highest bidder gets it, it’s the scammer for $10. Next highest bidder doesn’t work.
A re-auction is the only fair way to do it and is the least likely to be abused. Sure, you could try to keep it re-auctioned in perpetuity but what’s the upside? This is the most transparent way to do it as well because then the public can plainly see that it didn’t go through, and what it ends up selling for.
Next highest bidder is as opaque as it comes, nobody but the next highest bidder knows there were fraudulent bids or what it ended up selling for.
Good point.
Dynadot awards the domain to the next highest bidder.
They avoid the problem you discuss by using proxy bids, which ensures the bid amount increases incrementally. I believe GD and DC also use proxy bids.
So I think next highest bidder works.
I said the same kind of thing on Namepros as Michael, next bidder would be best but you have to be clear you can prevent gaming.
you bid $100 on one account, account #2 and account #3 just go into a bidding war, take the name to some crazy amount no other investor would participate.
So the auction closes at $80,000 winning bidder default, bidder 2 No thank you, I am not obligated I lost and spent the money somewhere else. Bidder 3 I will take it for $100 great.
Hey Ray, check out what I just wrote over at Morgan Linton’s:
https://morganlinton.com/wow-what-a-day-now-its-time-to-heal/#comments
How about that – Morgan literally just did the censorship thing (again) and removed both my comment and another one that came after me, and blocked me as I was adding something else.
It happened before with him too when I called him out for ostensibly pushing a new gTLD that was the reverse order phrase for the field of his startup, representing himself to not be someone who is a new gTLD pusher, to paraphrase, and yet apparently refusing to pay only about $2,000 for the very EMD .com for the industry of his own very startup. Go figure…
But wait – there’s more, Ray.
Since I knew Morgan might wind up doing something like that, here is my comment he just censored from his lovely post about the election:
“John November 8, 2020, 5:33 pm
I’m sorry but you folks are truly deluded and delusional, and I’m not saying that to be nasty or partisan, just efficient since there is no way or point in mincing words about it.
And before you jump to conclusions or make assumptions, I’m no Republican, conservative or T supporter. I’m independent, non-partisan, and apparently further along in the search for truth than most, though I have an “unfair advantage” in that regard which did not come from me, so I do not and cannot claim credit for myself, and which I only received as a gift.
Biden is a warmongering murdering psychopath and servant of the special interest establishment and oligarchic status quo at the expense of the American people, bought and paid for through and through. Harris is essentially the same, and that is why she was originally the first choice of the “establishment,” but they didn’t count on a wildcard like Tulsi Gabbard being able to knock her out before the latter even sold out herself.
I’m probably wasting my time and strength here, but felt up to it and almost commented before.
And Morgan, it doesn’t matter how “intelligent” you are or that you gave a TEDx talk, etc., this applies to you. It’s been clear what you are about for a long time now. However, the Matrix does have escape routes.
Speaking of which, while many such escape routes could be suggested, for the sake of brevity I cannot recommend the work and writings of one of the truly great and best truth tellers and *real* journalists of our time, Caitlin Johnstone. Though neither perfect nor infallible like us all, and even I disagree with a few things, she is one of the best. So – get to know her. In this case, perhaps it would be a good idea to begin with this article she put out a while ago:
“Biden Can’t Return Things To Normal, Because Trump Is A Normal US President. That’s The Problem.”
https://caityjohnstone.medium.com/biden-cant-return-things-to-normal-because-trump-is-a-normal-us-president-that-s-the-problem-173621c28465
In addition to her, get to know Jimmy Dore and The Jimmy Dore Show YouTube channel, specifically his (mostly) non-comedy videos there.”
And just below that:
“John November 8, 2020, 6:11 pm
“cannot recommend…more highly,” that is. 🙂”
I did not save the other person’s comment after mine, however, or the one I was trying to add that got blocked.
Turns out I do have a copy of the other comment Morgan censored:
“Peter G.
Comment:
So NOW it’s time to heal because your candidate won. After you harassed MY president for 4 years with unsubstantiated FALSE claims that he was a Russian asset. How unempathetic and also myopic.”
I had replied under that with something like “Good point, and I’m not even a (see above)…” and some mention of how I had come back to add something more, which is what was blocked before I could add it. What I was in the process of adding which got blocked included a link to this great Caitlin Johnstone article on Medium.com:
“Biden Will Have The Most Diverse, Intersectional Cabinet Of Mass Murderers Ever Assembled”
(Go to https : // caityjohnstone . medium . com/)
Aren’t people bidding over a certain amount supposed to be vetted with verifiable funds available? I thought that’s how all of the major auction rooms worked, you had to show proof of funds over low $X,XXX bids?
You aren’t walking into Christies or Sothebys and bidding on high priced artworks, or whatever, without them knowing that you deserve to be there.
Poor vetting systems.
Is it the same bogus bidder and who???
Maybe its just me but I read that and thought… what would stop a drop catch company (under a different ID of course) from winning good names on GD with the intent of not paying and thus hoping for a drop and then profiting from it?
And an answer of we certainly hope they wouldn’t do this won’t cut it.
Does GD look at this possibility in a technical way? just askin
I would say basic decency and common sense says that the domain should go to the next highest bidder when someone defaults.
People who bid in such auctions invest time and effort, possibly a great deal of time and effort. They may have to make certain financial arrangements, and engage in fiscal restrictions for the pending auction as well. Moreover, they may be end users to whom the domain is important, not just domain investors looking for something good to resell or flip. All that time, money and effort is sent down the drain if they are not given the opportunity to purchase the domain if the highest bidder defaults.
Not giving them that opportunity I would suggest is wrong and immoral.
PS – And I would suggest not giving them that opportunity is a plain and flagrant violation of the Golden Rule, among other things.
Ebay has a system where seller has 2nd chance and offers to the bidder below. Don’t know why GD doesn’t do same. I often bid in real time auction for antiques and there are now quite a few non payers. Then have to offer in next auction. Also many auctioneers are banning people buying with credit cards, don’t know reason but maybe fraud ?. They now only accept debit cards or bank transfer. Times are changing.
One thing very slightly off topic. I noticed that when buyer pays by Escrow at GoDaddy when simply purchasing “a” domain they have opportunity to decline to continue with purchase even after the domain has been transferred to Buyer. Is that correct and wonder how often they do reject and transfer domain back ?. Its like they have it “on approval” ??.
Well, I’ll tell you what then. I hate how NameJet requires the Estibot lunacy number to appear with listings, so I will never use them to sell, total deal breaker; however, one thing I do like is how they have required verification to bid above a certain amount. If they still do.
This was a comment I left on this topic on another blog, but I’ll also add that in any case it shouldn’t be offered to bidders beyond the second highest. Otherwise you might see a ‘triad’ bidding scheme where two fraudulent bidders drive the price up fast, so the third highest fraudulent bidder gets the domain cheap.
—
30 May 2020 TheDomains.com
Re-auction with original bidders where the auction was private [non-payers excluded]. For public auctions where bidders may have held-off due to fake high bids taking to price too high too quick, a public best-offer round—one best offer allowed, and deposit required as a % of the offer to be valid, with further offer rounds for buyers with matching offers.
* 30 May 2020 DomainInvesting.com
@John No surprise I blocked Linton a long time ago I despise him.
Instead of discussing how to deal with non paying bidders why not discuss why and how this happens?
1) How is a bidder able to place bids above 5 figures? Is there an available funds confirmation of any sort? Is there a % of the total bid that must be transferred to the auction platform before the bid is accepted? This is the best mechanism to eradicate shill and fake bidding but it will hurt participation on auction platforms and that is a no-go for them. So, if that is a no-go for them then it’s a no-go for the clients to accept been asked to pay as a second or third option on an auction that is deemed fraudulent. The re-auction is the ONLY acceptable solution.
2) Why these non-payment auctions happen? Who has interest in it? It is clearly a very small part of the total auctions happening on every day, but they are still relevant to the persons that commit their time to participate regularly in these auctions and that are the only ones who can detect and track this – the domainers. There are people that are carried away in bidding wars. But i doubt they account for the majority of these non payments. There are clearly ill-intention patterns on some auctions that end not being paid. Who has something to win with this? Other competitor auction platforms?
3) The fundamental question is: who guarantees to domainers that they are not *overpaying* on other successful auctions if there’s seems to be no control to stop non-paying bidders or ill-intention bidders?
Offer to the 2nd place bidder as long as their bid was within a set percentage of the top bidder’s price; say 20% +/-. If the 2nd place bid wasn’t within that %, reauction to either all those who participated in the first auction or publicly for all to bid. If 2nd place bidder (now) want to buy, reauction.
In the alternative to simplify the auction process, change the auction terms and conditions where the 2nd place bidder automatically gets / has to buy the domain as long as their 2nd place bid was within the % threshold of the defaulted top bidder.
Correction: “If 2nd place bidder (now) does not want to buy, reauction.
Thanks for this article. There are some good comments on here. It is something we are looking into.
We do have fraud checks in place both manual and automated and that bid up scheme with two or three people bidding a name well above normal pricing in order to get the domain handed down to them as the “legitimate” buyer is an old scam that we have several ways to counteract.
We do have a lot of other measures in place as well to combat bad bids. We have ways to vet buyers and bidders. At the end of the day most of the domains that are unpaid are unpaid because of a payment issue by a legitimate bidder. We have been testing out ways to help with this that have been working. We are looking now into a systematic way to expand this out so that we can extend the payment time on certain transactions which should further reduce the already low number of failed purchases on the platform.
Hi Joe
Since you’re with GoDaddy I thought I’d take this opportunity to ask you to read this blog comment from Friday, which I call “the truth about .US”:
Post: “.US live Town Hall” – Nov 5, 2020
https:// onlinedomain . com/2020/11/05/domain-name-news/us-live-town-hall/#comment-490842
Regards,
John